Britain's opposition Labour Party prefers a new election to a second referendum on Brexit, its leader said on Sunday, heaping pressure on Prime Minister Theresa May whose plans for a divorce deal with the European Union have hit an impasse.

Labour's Jeremy Corbyn has so far resisted calls to back a "People's Vote", or new referendum on the decision to quit the EU. But the political landscape has changed since May was ambushed by the EU on Thursday over her plans for Brexit - the biggest shift in British policy for almost half a century.

With talk of a new election swirling after May's "Chequers" plan was all but shredded at an EU summit in Austria last week and chances of Britain exiting the bloc without a deal rising, Labour is under pressure to start setting the Brexit agenda.

Corbyn, a veteran eurosceptic who in 1975 voted "No" to Britain's membership of the then-European Community, said that while he would listen to a debate about any possible second vote on Britain's membership, he preferred a snap election if May failed to get a deal that Labour could support in parliament.

"Our preference would be for a general election and we can then negotiate our future relationship with Europe but let's see what comes out of conference," he told the BBC's Andrew Marr Show, saying Labour was ready to vote against any deal.

"We would vote it down if it didn't meet our tests in order to send the government, if it is still in office, straight back to the negotiating table and if there is a general election and we are in office we would go straight to the negotiating table."

Britain is to exit the EU in March next year. After weeks of both sides making positive noises about prospects of clinching a divorce deal and future trading relationship, the mood music turned sour on Thursday in Salzburg, Austria, when the bloc's leaders, one by one, came out to rubbish May's Chequers plans.

Britain's Prime Minister Theresa May makes a statement on Brexit negotiations with the European Union at Number 10 Downing Street, London September 21, 2018 . Jack Taylor/Pool via ReutersA tacit agreement to try to offer her some support before she heads to what is going to be a difficult annual conference of her governing Conservative Party later this month was broken by some British diplomatic missteps.

New election?

May has vowed to hold her nerve in the talks, pressing the EU to come up with an alternative proposal to her Chequers plan, named after her country residence where a deal was hashed out with her top ministers in July.

But the impasse with the EU has prompted some to predict an early election, with local media reporting that May's team has begun contingency planning for a snap vote in November to save both Brexit and her job.

Brexit minister Dominic Raab again ruled out any new election later this year, describing the suggestion as being "for the birds". He said Britain would not "flit from plan to plan like some sort of diplomatic butterfly".

"We are going to be resolute about this," Raab added.

While saying she will stick to her guns, May might have little chance but to change tack after a party conference where the deep divisions over Europe that have riven her Conservatives for decades will be plain for all to see.

A senior pro-EU Conservative lawmaker, Nicky Morgan, said May would have to give ground on trade and customs arrangements to overcome the biggest obstacle to a withdrawal accord - the prevention of a hard border between the British province of Northern Ireland and Ireland, a member of the EU.

"I am not sure there is life left in Chequers," Morgan, chair of parliament's Treasury Select Committee and a former cabinet minister under May's predecessor, told Sky News.

"We want to see a deal. The question I think that has to be answered now by the government, by the EU leaders, is what room for movement is there, how do we move on from where we ended up last week?"